WHO IS A STAKEHOLDER?
In a business, a stakeholder is a person with an interest or concern in the business’ functioning. Stakeholders can affect or are affected (directly or indirectly) by an organization’s actions and / or results. While creating a “brand”, the identification of the company’s values, translating those values into an appealing brand personality and identifying the stakeholders are three imperative steps. It is in the third step that stakeholder’s analysis comes in.
A brand’s stakeholders can be broadly classified into two categories:
• Those within the organization – Internal
• Those outside the organization – External
The following can comprise of your organization’s internal stakeholders:
• Investors & Stockholders – Your organization runs on investors’ monies and every change that the brand goes through affects the investor’s profits / losses. Similarly, every monetary decision investors take affects the brand. While investors’ money decides the future course of the brand, in a publicly listed company, every decision and action that the brand’s custodians take affects the value & worth of your organization’s shares. In a company, stockholders may or may not be a part of the management. Managing all non-management stockholders is imperative as it directly impacts the mood and sentiment of this stakeholder, and can have a positive or adverse impact on your business & brand. Appeasing the sentiments of these stakeholders can be managed by constantly communicating with them about the brand’s status. Keeping these two stakeholders in the know is important all the time, be it good news or bad. The good news will ensure that the backlash of any bad news is mitigated.
• Decision Makers – Everything about a brand boils down to the decision makers. A brand’s decision makers are the brand managers and or the marketing team. It maybe speculated that the decision makers have the greatest power to affect the brand in any way, after investors. Every decision that they make trickles down through the entire chain of other stakeholders. When any external or internal stakeholder affects or attempts to affect the brand, the decision makers are affected on the forefront since it all comes upon them to set things right or take things forward.
• Employees – Employees make an integral part of an organization and a brand. They are the first level through which your brand promise gets personified. More employees will want to work with you if you are a famous brand. Existing employees would want be loyal to the organization since working for a popular brand will keep them motivated to work better & vice versa.
The external stakeholders are the following:
• Government – This is the main factor behind why a company does or doesn’t exist in a particular market with a particular form of business and eventually grow to become a brand. Changes in government policies, be it interest rate fluctuations or duty exemptions for your category, export benefits or simply leniency in licensing rules, every government action has a direct impact on your business, and hence, by extension on the brand.
Not just this, the government is also why your brand can or cannot communicate with consumers. The government has rules & regulations in place that debar certain category products from advertising. You may still enjoy being a popular brand, but lose out on advertising your product or offering. The government is your brand’s most important stakeholder, yet one that you cannot influence & have no power over.
• Suppliers & vendors – Suppliers & vendors are a part of your brand’s foundation so to say. Enjoying a solid brand image will increase the suppliers’ trust in your offering. They would want to work with a brand that does well in the market and benefit from the brand’s image & standing. Changes in the work they do, the quality of their delivery and event the cost at which they supply directly affects your line of work, especially in manufacturing & production related businesses.
• Distributors and other external representatives – Distributors are your first consumers. Your product goes through the entire distribution channel before it reaches consumers. They are another key stakeholder when it comes to manufacturing businesses. Distributors & retailers prefer stocking brands that they know are well known, have a consumer pull & a faster churn off the shelves. To say the least, the actions of the distribution channel often have the power to make or break your brand.
• Consumers / Clients – They are the primary reason behind the existence & performance of your brand. Every decision a brand makes, is keeping in mind the consumer and how it affects them. On the contrary, even a slight change in the consumer (how they feel, react, think, what they do) affects the brand and its performance. So decoding how you communicate with them becomes an imperative.
• Competitors – While every organization’s sole motive is to earn profit, a brand strives for increased market share & consumer’s mind share. A smart / innovative step on part of your brand can get you more consumers and negatively affect competition, with the converse holding true too. Although external, a competitor’s every action affects your brand directly.
WHAT IS STAKEHOLDER ANALYSIS?
Stakeholder analysis is defined as the process of identifying individuals / groups (stakeholders) who are most likely to affect or be affected by an action or result of the organization and then ranking them in accordance to the impact of their actions on the organization or the impact of the organization’s actions on them. Conducting a stakeholder analysis allows a brand to understand & evaluate the people involved in helping create, disseminate or alter the image & identity of a brand. The information derived from a stakeholder’s analysis is then put to use in prioritizing each stakeholder in terms of communicating with them & advertising techniques deployed to do so. A detailed stakeholder analysis will tell you who do you communicate with most aggressively and who can you please by simply giving brief appearances.
A stakeholder analysis proves very helpful for a brand and is essentially helpful to identify:
• Stakeholders’ interests in the brand
• Mechanisms to influence other stakeholders
• Potential risks the brand may face
• Key people to be communicated with throughout the brand lifecycle.
• Negative stakeholders as well as their adverse effects on the project
But, how do you go about identifying your brand’s stakeholders? Are they the same as the organizations overall stakeholders? Are the roles the stakeholders play in an organization same as their roles as the brand’s stakeholders? Foolish will answer all these questions soon enough.
HOW DO WE DO STAKEHOLDER ANALYSIS AT Foolish?
With the brand’s stakeholders noted, there are multiple approaches to conducting a stakeholder analysis. Stakeholder analysis has many swings to it, right from Aubrey Mendelow’s Power – Interest grid that maps each stakeholder’s power in relation to interest in the organization, to other models that rank stakeholders based on needs and the relative importance of stakeholders to others in the network.
With these universally recognized models, we, at Foolish love to bring in our experience to add value while conducting a brand’s stakeholder analysis.
Our process starts with identifying who the stakeholders of the brand are. These stakeholders can be internal or external (as listed above), organizations or individuals. While organizations are important stakeholders to a brand, individual stakeholders are who your brand should be communicating to.
The second step involved in our stakeholders’ analysis is, understanding the stakeholders. What they feel & how they react to any decision that the brand takes is tells us how their interest levels in the brand. Understanding them opens avenues of the organization to engage stakeholders in conversation & communicate with them.
The last step, prioritizing stakeholders is the most important & resulting step of the entire process. We list all of the brand’s stakeholders and then sort them on the basis of, a) the power a stakeholder holds; and b) the stakeholder’s interest in the brand. Placing the stakeholders in accordance to these two metrics helps us break down further steps.
For instance, a stakeholder who ranks high on both power & interest will have to be taken care of closely. However, a stakeholder who holds high power in the brand but has low interest will simply have to be kept satisfied and happy. In cases of a publicly listed company, shareholders are an example of stakeholders who have low power yet high consumer interest. The approach to adopt with this category is keeping them informed and in the loop at all times. And lastly, low power & low consumer interest – this category should not be interpreted as unimportant stakeholders. They simply take up lesser time as compared to others and need to be monitored from a macro level.
Foolish adopts and takes this process further and gets into scrutinizing stakeholders using a “what if” thought process. This process helps us break down the effects of every decision the brand makes and how it will affect each stakeholder. Similarly, an evaluation of “what if” a stakeholder behaved a certain manner lets us evaluate the gravity with which the brand is affected.
WHY IT IS IMPORTANT?
Stakeholders’ analysis is an essential process while planning and conducting new brand projects. However, this process is often overlooked by organizations often due to a lack of expertise in the area. The process involves adequate planning, designing a structure and eventually managing & executing it. For a brand, implementing a transparent & involved approach with stakeholders during the development of a new aspect keeps the latter interested and involved.